Regional News

Interview: Airport Authority Hong Kong

While other major infrastructure works such as the railway expansion projects of the MTR Corporation (0066) and other government public works are charging ahead, over at Airport Authority Hong Kong, the pace of its new projects is seemingly on the slow side.

Not slowed to a standstill though.

Lately the authority has been quietly assembling its project team for the third runway for Hong Kong International Airport and other smaller projects.

It awarded a series of consultancy contracts last year to AECOM Asia, Atkins China and Mott MacDonald for design services for the Intermodal Transfer Terminal, Terminal 2 Expansion and reclamation and infrastructure for the third runway.

The AA is currently calling tenders for three more consultancy contracts.

The Executive Council gave the green light to the third runway in March last year on the recommendation of the authority.

Earlier in June 2011 the authority’s Master Plan 2030 gave two options for expansion of the airport, either enhancing the current two runway system or building a third runway.

The third runway plus supporting facilities is to be built on 650 hectares of reclaimed land on the northern side of the existing airport island.

Actual construction on site has not started yet, not by a long shot.

The authority said the third runway was still at planning stage and its major task now was compiling the Environmental Impact Assessment (EIA) report and getting it approved.

The report would include all study findings and possible mitigation measures.

“Subject to the successful completion and comprehensive analyses of all surveys, we plan on submitting the EIA report towards end of 2013 or 2014. The whole EIA process is expected to take about 18 to 24 months,” the authority said.

Another year would be spent getting government approvals such as environmental permit, gazettals for foreshore and seabed, and arranging the financial details.

After that the real action starts in the implementation phase, expected to take eight years to complete, and consisting of land formation, detailed design and construction.

This is all assuming that the EIA process goes smoothly.

Environmental groups such as the WWF Hong Kong have been up in arms over the planned third runway, fearing an adverse impact on the natural environment and especially the Chinese white dolphin.

They also want the authority to provide assessments of carbon emissions and related costs and a social return on investment study.

Funding for the third runway is, however, not high on the things-to-do list yet.

According to Master Plan 2030, the estimated capital investment for the third runway was about HK$86.2 billion at 2010 prices or HK$136.2 billion at money-of the day (MOD) prices with expenditure spread over 15 years from 2016 to 2030.

By way of comparison, the final bill for the entire Airport Core Programme for the new airport, which was implemented from 1991 to 1998, came to HK$155.3 billion MOD.

This included the airport terminal building, various reclamations, franchises, government public works, the Airport Railway and the Western Harbour Crossing.

The third runway of Hong Kong International Airport, to be built on the northern side of the airport island shown here, is estimated to cost HK$136.2 billion at money-of-the-day prices (Airport Authority Hong Kong)

“We are currently working on the EIA study and the associated design details. We will study the funding option in due course and we do not rule out the possibility of adopting any options,” the authority said.

A Transport and Housing Bureau paper to the Legislative Council in March last year forecasted a funding shortfall of HK$102 billion at MOD prices.

As to finding contractors, the authority said the strategy for procurement would be based on scope of works identified in the scheme designs currently being prepared, the completion of which is planned for 2014.

“In view of the vast and complex nature of the Project, it is anticipated that an appropriate mix of different contractual arrangements, traditional and non-traditional, will be required to suit the various elements of work to be procured on the project,” the authority said.

It added it would continue to use partnering techniques with the consultants and contractors.

The example of London’s Heathrow Terminal 5, which according to reports was completed on time and to budget, would also be studied by the authority.

Asked about manpower for the expansion projects, the authority said: “In view of the high air traffic figures and future airport developments, we now have more colleagues in various business functions than before.”

It added it would continue to review manpower resources and recruitment plans from time to time.

Whether the authority, and probably more importantly its consultants, would be able to add professional and technical staff when the time comes is a moot point.

According to forecasts in Master Plan 2030, by 2030 air traffic demand is expected to reach 97 million passengers, nine million tonnes of cargo and 600,000 air traffic movements (ATMs) per year. The existing two runway setup has a maximum capacity of 420,000 ATMs per year (Airport Authority Hong Kong)

A brief glance through the job advertisements in recent months showed contractors, consultants and developers all scrambling to hire more staff.

Consultant AECOM in particular took out a whole page job advertisement in the Classified Post last month for 73 vacancies for Tuen Mun – Chek Lap Kok Link Northern and Southern Connections.

Developers such as Cheung Kong Holdings (0001) and Henderson Land (0012) as well as MTRC have all been looking to hire lately.

Based on the current Master Plan 2030, having three runways would allow the airport to cope with forecast demand up to and “possibly beyond 2030”.

This would however be subject to future improvements in aircraft navigation, airspace and air traffic management, which could by itself to a certain degree increase runway capacity.

Asked if there was a possibility of a fourth runway which the third runway might make allowance for in its design, the authority said its 20-year plan was updated every five years.

“The fulfillment of forecast demand up to 2035 will be assessed in the next master planning cycle,” the authority said.

The next planning cycle is due in 2016, about three years from now.

Note to readers: Construction Post was hoping to interview Kevin Poole, the authority’s deputy director for projects, for this article but the authority said he was very busy and offered to answer questions by email instead.